(S,s) Inventory policies in general equilibrium

No 97-07, Working Paper from Federal Reserve Bank of Richmond

Abstract: We study the aggregate implications of (S,s) inventory policies in a dynamic general equilibrium model with aggregate uncertainty. Firms in the model's retail sector face idiosyncratic demand risk, and (S,s) inventory policies are optimal because of fixed order costs. The distribution of inventory holdings affects the aggregate outcome in two ways: variation in the decision to order and variation in the rate of sale through the pricing decisions of retailers. We find that both mechanisms must operate to reconcile observations that orders are more volatile than, and inventory investment is positively correlated with, sales, while remaining consistent with other salient business cycle characteristics. The model exhibits strong amplification for some shocks, and persistence to a limited extent.

Keywords: Inventories (search for similar items in EconPapers)
Date: 1998
References: Add references at CitEc
Citations: View citations in EconPapers (17)

Downloads: (external link)
http://www.richmondfed.org/publications/research/working_papers/1997/wp_97-7.cfm (text/html)
Our link check indicates that this URL is bad, the error code is: 403 Forbidden
https://www.richmondfed.org/-/media/RichmondFedOrg ... /1997/pdf/wp97-7.pdf Full text (application/pdf)
Our link check indicates that this URL is bad, the error code is: 403 Forbidden

Related works:
Journal Article: (S, s) Inventory Policies in General Equilibrium (2000)
Working Paper: (S, s) inventory policies in general equilibrium (1996)
Working Paper: (S,s) inventory policies in general equilibrium (1995)
Working Paper: (S,s)Inventory Policies in General Equilibrium (1995)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:fip:fedrwp:97-07

Ordering information: This working paper can be ordered from

Access Statistics for this paper

More papers in Working Paper from Federal Reserve Bank of Richmond Contact information at EDIRC.
Bibliographic data for series maintained by Christian Pascasio ().